Question: If so much of the economic losses in the mortgage industry were from unscrupulous brokers submitting false documentation how come there is such a high re-delinquency rate on loan mods that the banks originated themselves?

Answer: The attitude of non-accountability has enabled brwrs to take the attitude of I’m only going to make the payment if its in my best financial interest.

Why not they can stay in their homes for 6-12-18-24 months, make 0 payments and then if the bank threatens foreclosure they can claim they are being unfairly evicted from their homes and just a victim of the economy. And if they live in a predominantly minority area forget about it, just call your local congressman/councilman and tell them you aren’t going to vote for them if they allow the bank to foreclose and you should be good. If all else fails just call a lawyer and they can probably find a piece of paper that the lender forgot to dot an ‘i’ on or cross a ‘t’ and then your mortgage may get wiped away for good (ultimate come up).

Click here

http://agentgenius.com/g-rants-insanity-more/real-estate/no-bucks-no-buck-rogers/

watch this video below for 1 theory:

http://tbwsdailyshow.com/2011/03/22/the-lo-compensation-fed-rule-scandal/

Letter From Barney Frank to Fed Found Supporting Broker’s Position on LO Comp

1) Speed & Customer Service (brokers are on 100% commission so they are motivated to close your deal, bank employees are typically on salary/partial commission) Think Best Buy versus Circuit City only that in this case, Circuity City is cheaper and has more product inventory.
2) More Lending channels to shop for best rates and terms for the consumer
3) Brokers want — need — referrals from you and your Real Estate Agent to generate more business in their long-term business plan. Brokers are skilled at the art of mortgage; have loads of workarounds up their sleeve; and have a history of overcoming obstacles that come up. Brokers have the relationships with various lenders’ underwriters to get things done in a timely manner.

http://www.inman.com/buyers-sellers/columnists/tara-nicholle-nelson/3-reasons-use-a-mortgage-broker

If you didn’t know, now you know…

FHA increasing monthly MI 4/18/11 to bolster insurance reserves…

FHA Sets New Premium Structure for 15- and 30-Year Loans to Boost Capital Reserves

Sounds like the some unions in New York are going to sell their Pension holdings in Chase bank if Chase doesn’t begin to be more flexible with granting loan mods. This is a great idea, and I hope it catches on, why should taxpayers bail out banks and then not expect to receive any help in return??…

NY Times article about Unions playing hardball with banks over granting loan mods

Just received the following e-mail from our rep at First Mortage 12/16/10:

Press Release
December 13, 2010
External Affairs Branch
(916) 795-3991
Patricia K. Macht, Director
Brad Pacheco, Chief, Office of Public Affairs
Contact: Wayne Davis, Information Officer
pressroom@calpers.ca.gov

CalPERS Suspends Mortgage Loan Program
SACRAMENTO, CA – Citing limited member usage and increasing costs, the Board of the California Public Employees’ Retirement System (CalPERS) today approved suspending the program that offers mortgages to CalPERS members.
“Over the past few years, there has been limited interest among our members in the Member Home Loan Program,” said George Diehr, Chair of the CalPERS Investment Committee. “This change allows us to redirect our resources and reduce the risk to the Fund.”
Once the suspension is in place, CalPERS no longer will accept mortgage applications. Loans currently in the pipeline are expected to be completed over the next three months. Members with existing CalPERS loans are not affected.
Since the Member Home Loan Program (MHLP) launched 29 years ago, CalPERS members have taken out more than 136,000 loans worth more than $22.7 billion. The program took a conservative approach to lending from the start, offering mostly fixed 15- and 30-year mortgages at market rates.
Still, the Member Home Loan Program has been impacted by the changing mortgage marketplace and severe financial downturn. Since 2004, the program has been averaging only between 1,000 and 4,500 loans a year, just a small percentage of CalPERS 1.6 million members and retirees. Despite the low numbers, the amount of staff time required to operate the complex loan program has risen considerably.
MHLP also has suffered from an increasing number of delinquencies and defaults in the Secured Personal Loan Program, which allows members to borrow as much as $18,421 against their retirement contributions for a down payment.
“Some borrowers have suffered during the recent financial crisis, so suspending the Member Home Loan Program allows us to concentrate on them while at the same time refocusing our limited staff on the overall CalPERS Fund,” said Joe Dear, CalPERS Chief Investment Officer. “In the meantime, anyone with an application currently in the pipeline has no need to worry. We’ll make sure those requests are properly processed as quickly as possible.”
CalPERS is the largest public employee pension fund in the United States with assets of approximately $218 billion. The retirement system administers retirement and health benefits for 1.6 million active and retired California State, public school, and local public agency employees and their families on behalf of more than 3,000 public employers. More information is available at www.calpers.ca.gov.
The last day to lock loans will be on Friday, December 24, 2010
OC Wholesale Branch
First Mortgage Corp.
#1 Branch
2010, 2009, 2008
(866) 777-8827
www.firstmtgwholesale.com

rates are rising and Down Payment Assistance Programs are being taken away due to poor economic condition of government agencies that fund them, not a good sign for housing market…

The benefits of surety bonds in the mortgage industry

New mortgage specialists in California have many things to consider, such as what kind of loans to specialize in, where to locate their office, and how to get their names out into the industry. Unfortunately, one key requirement is often misunderstood by new mortgage specialists as they begin establishing their business: surety bonds.

The purpose of surety bonds in the mortgage industry is to protect consumers in the event of fraud or other wrongful practices on the part of the mortgage lender or broker—whether or not the bond is required by law.

Surety bond basics
Oftentimes even those required to be bonded by law get confused as to how a surety bond works. Essentially, a surety bond is a legal agreement between three parties to help ensure the fulfillment of a contract:

1. The principal performs a service and secures a bond to guarantee his or her work. In the mortgage industry, the mortgage specialist is the principal and therefore is responsible for getting a bond.
2. The obligee receives the service performed by the principal and is protected by the financial security of the bond. In the mortgage industry, all consumers of a mortgage specialist receive protection from the bond.
3. The surety issues the bond as a neutral third party to ensure that all work done by the principal is completed on time and according to the contract. In the mortgage industry the specialist can apply to get a bond at a variety of different surety bonds providers, including surety agencies and insurance companies.

Protection provided by mortgage lender bonds
Mortgage lender bonds protect consumers against dishonest lending practices, including:

• knowingly approving borrowers for loans they will not be able to repay
• encouraging borrowers to fraudulently represent themselves while applying for a loan
• pressuring borrowers to buy to certain loan products, including high-risk loans or loans with higher interest rates
• establishing an interest rate based on anything other than the borrower’s credit history
• charging unnecessary or additional fees
• deliberately targeting vulnerable or at-risk borrowers to suggest cash-out refinances

If a mortgage specialist were to participate in dishonest or fraudulent lending practices, consumers can make a claim on the bond. If the claim is found to be valid, the specialist would be required to pay retribution up to the bond’s full amount. If the specialist is unable to do so the surety could be held accountable for footing the bill. This is why surety agencies conduct thorough background checks when determining who they issue bonds to.

Mortgage license regulations and bonding
There are two different ways to secure a mortgage license in California. One is under the Department of Real Estate and the other is under the Department of Corporations, which is based on the California Finance Lenders Law—or CFLL. The CFLL requires all mortgage brokers and lenders to provide a $25,000 surety bond when applying for their license to work in the state. Licensing under the Department of Real Estate, however, does not utilize the CFLL so surety bonds are not mandatory. The California Residential Mortgage Lending Act (CRMLA) requires all mortgage bankers to provide a $50,000 surety bond before getting their licenses, however there are a number of exemptions to this requirement.

Each method has different stipulations and requirements applicants must meet before being issued a license. If you’re new to the California mortgage industry be sure to review their policies to decide which would best fit your needs. Doing so will also determine if you’re required by law to secure a bond.

Required bond amounts and fees
The amount of a mortgage bond varies for a number of reasons, including the average number of mortgage loans you service in a year and the jurisdiction in which you do business. Typical California surety bond requirements mandate the penal sum to be between $10,000 and $50,000. Always check local rules and regulations before securing a bond to make sure you’re complying with all laws regarding the bond amount.

To secure a bond, an average mortgage specialist pays a fee to the surety provider. The fee usually costs the specialist about 1 to 3 percent of the bond’s penal sum. If the specialist’s financial history has negative marks, the cost of the bond will be higher because the surety takes a greater risk in backing the specialist. Taking the time to secure a solid surety bond is a worthwhile investment for you as a specialist, as well as your consumers.

After hearing many complaints regarding lender acceptance of e-signatures in regards to FHA insured loans specifically, HUD has finally changed their stance on acceptance of docusign electronic signatures.

As of, April 8, 2010, e-signed third-party documents, including real estate contracts, are now being accepted by the Federal Housing Administration (FHA) with the issuance of today’s mortgagee letter (ML 10-14).

This mortgagee letter is the first in what is expected to be a series of responses to this initiative. With this policy statement from the nation’s largest mortgage insurer, real estate professionals can use DocuSign to get real estate contracts, addenda and other documents signed electronically, and their buyers can apply for FHA insurance with confidence. The FHA mortgagee letter can be found on HTTP://WWW.HUD.GOV website.

DocuSign began direct conversations with FHA on this issue back in October of 2008. They shared this blog post about FHA and Lender Acceptance of electronic signature back in July 2009. DocuSign spearheaded an industry-wide effort to move the FHA to formally recognize e-signed third-party documents.

The staff at the FHA has been pushing for progress for over two years. It took some early encouragement and help from many concerned parties such as the National Association of REALTORS® (NAR) and ESRA to help get this mortgagee letter published.

Electronic Signatures On Third Party Documents